Court Affirmed PTAB Finding that the Claims Are Covered Business Method Claims and Would Have Been Obvious

The court affirmed the PTAB’s finding that SightSound’s patents were invalid as being obvious in connection with Apple’s requested Covered Business Method (CBM) review. SightSound first argued that the PTAB erred by initiating the proceedings to include the issue of obviousness, even though Apple did not explicitly raise the issue of obviousness. The court, however, rejected this contention, because 35 U.S.C. §324(e) bars the court from reviewing whether the Board properly initiated a CBM review. Next, SightSound argued that its patents are not CBM patents. This issue is reviewable, as it goes to the Board’s final decision. Here, the court agreed with the Board that the claims, being directed to the electronic sale of digital audio, are directed to activities that are financial in nature and agreed that the claims did not claim a “technological invention,” because the technical components recited in the claim were generic devices known in the prior art.

Next, the court affirmed the Board’s construction of the claim term “second memory” as excluding records, tapes, and CDs, but disagreed with SightSound that the term excluded all removable media. While there was an implied disclaimer of records, tapes, and CDs, there was no disclaimer of all removable media, including floppy discs, as SightSound argued. Lastly, the court affirmed the finding under the substantial evidence standard that the claims would have been obvious. There was substantial evidence to support the finding of no nexus for commercial success as there are other inventions and features embodied in the iTunes store. Further, the court held that the fact that the reference disclosed more than one embodiment does not amount to teaching away where the reference does not criticize or discourage the claimed solution.